Rethinking climate readiness: How ICE’s climate data helps close risk gaps and reduce lender blind spots

​Extreme weather events are now more than just an occasional disruption; they are redefining the landscape of housing finance. And, the frequency and intensity in which these events occur, combined with rising insurance and utility costs, fluctuating property values, and shifting housing rates, provide challenges for lenders looking to effectively streamline operations, mitigate risk, and support their borrowers.

For many lenders, gaining insight into the potential and actual impact of climate disasters on their loan pipeline has lacked in providing the full picture. Lenders have traditionally relied on data at the county level under FEMA, which is not granular enough to identify impacted properties or assess future vulnerability. For instance, ICE’s October Mortgage Monitor report indicated that 5.3 million mortgaged homes face a 1-in-100-year flood risk, which amounts to a 1-in-4 chance of flooding during a 30-year mortgage term. Yet 85% of these homes lack flood insurance, and many are located outside of a FEMA-designated high-risk area.

Without accurate and comprehensive property-level data, lenders lack the insight to identify pipeline and portfolio risk before a disaster occurs. 

Blind spots in climate risk management

While proactively managing risk before disaster is important, lenders also struggle during and post-disaster, when decisions and communication to their borrowers are most critical. While FEMA disaster zone records may indicate the boundaries of a countywide disaster area, they may not detail the specific neighborhoods or blocks that were impacted. This lack of insight can cause blind spots for lenders in how to address and assess property damage, how to best allocate resources, when to pause loan approval and funding, and where to direct borrower communication to those affected.

To address these lender challenges, ICE offers a robust suite of climate risk solutions that are comprised of current, comprehensive data and advanced analytics to deliver unmatched visibility into the potential and actual impact of climate-related events to subject properties. By gaining access to climate and affordability data in near real-time, lenders and servicers can better prepare before a disaster strikes, receive alerts and monitor loans during a disaster event, and accurately track property risk post-disaster. 

With ICE’s Climate Risk Analytics and Housing Affordability Analytics, lenders can proactively identify at-risk areas and gain a deeper understanding of the potential risk exposure to loans in their active pipeline or servicing portfolio. This type of predictive information can also help lenders analyze potential loan losses, reevaluate the accuracy of outdated flood risk maps, develop risk procedures to better assist their borrowers and proactively monitor subject properties that are listed in a higher-risk area.

During a disaster, ICE’s Disaster Events deliver automated notifications to the lender, allowing them to respond quickly, reduce errors, and provide better assistance to the borrowers who need it most. After a disaster, ICE’s Recovery Property Data provides valuable insights into affected properties and surrounding areas, including properties that may need an updated inspection or valuation, properties that have been foreclosed on or vacated, and changes in affordability that could impact the local housing market.

Lessons learned from past disasters

Earlier this year, Los Angeles saw devastation when the Altadena and Pacific Palisades neighborhoods were impacted by wildfires. During the disaster event, the entire Los Angeles County was classified as a “disaster zone,” under current FEMA guidelines, but damage was concentrated only to certain blocks or areas of these neighborhoods, with select properties badly or completely destroyed and others untouched. 

With ICE’s climate data, lenders can gain deep and immediate insight into which properties may have been impacted, allowing for minimal manual research and the ability to use actionable data to drive recovery efforts to the right borrowers.

Daily monitoring and alerts on the impacted properties can provide additional valuable insights into updated insurance premiums, property tax changes, and building permit data, indicating current disaster recovery efforts. Data at this level also allows lenders to anticipate the effects of recovery in the area on property values and borrower stability in subsequent months.

Navigating post-disaster recovery 

Accurate assessment of subject properties following a disaster requires certain steps that should be taken to properly understand when and where lenders need to take action. Current insight into property assessments allows lenders to keep up with which property values in an affected area are going up or down and assess shifts in affordability as impacted properties start to rebuild. 

ICE’s Housing Affordability Analytics is tied directly to specific loans, showing real-time changes in insurance, property taxes, and utilities. In the aftermath of disaster, a borrower’s financial stability is often disrupted, resulting in the need to mitigate losses. 

ICE also provides lien alerts for critical property-related events that result in status changes on the collateral, and listing alerts on properties that have escaped disaster, notifying the lender if those listings are going up for sale, effectively shining a light on how recovery is progressing throughout affected areas.

Climate risk has become a key consideration in mortgage underwriting and decision making. Two properties in the same ZIP code may encounter remarkably disparate fates in the aftermath of disaster. ICE’s climate data provides lenders with the details to examine such differences, enhancing their capacity to make informed lending and servicing decisions while supporting compliance and borrower satisfaction.

From awareness to action

With climate events increasingly entwined in housing finance, resilience is more than just a response. It’s a business requirement. With ICE, lenders can transition from county-level data to more granular insights, allowing them to make informed, quick decisions that help safeguard borrowers, reduce risk and keep loan operations running smoothly.

With the frequency, severity and cost of climate disasters continuing to increase, disaster preparation will be a differentiator in the near future. Lenders and servicers that invest in climate solutions today can not only help preserve their profitability but provide reliability and trust that borrowers look for when times turn uncertain, providing quick response when their borrowers need it most.

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